Minimum Wage vs Living Wage: Is It Time to Differentiate the Two?

Since the Portion PadL is sold in nearly every state, I have the pleasure to lean about my customer’s pizza business and how our economy is helping their business. I hear many positive comments, but a couple of their greatest concerns involve the sharp rise in minimum wage. The inability to increase menu prices to compensate for the wage increases and the labor pool shortage. Though all states have different minimum wage standards, starting in 2019, some states and their municipalities will be raising minimum wage from a range of $11.00 an hour to over $15.00 an hour. My customers tell me the high minimum wage, tight labor pool and the inability to find people who want to work for their wage is putting a huge strain on their business. I also hear from family and friends who are not in the restaurant industry express the same issues. This tells me the increase in minimum wage is not just a restaurant industry problem. Nearly every industry is experiencing the same minimum wage and labor pool problem.

At the beginning of every year, I go to California to visit my 80-year-old Aunt and some of my Portion PadL customers. My Aunt is much more left with her political views than I. Inevitably a conversation turns to livable wage and the push for a countrywide $15.00 minimum wage. I explained to her that when I owned my pizza business in Ohio, it defies logic for me to pay a 16 or 17-year-old who has never had a job and cannot even answer the phone, $15.00 an hour. Her reply, “What about the adults who are trying to raise a family? They can’t afford to live on $8.00 an hour.” She has a point.

Amazon recently raised their employees minimum wage to $15.00 an hour. Other mega businesses, like Walmart and Target start their employees at $11.00 an hour. Yet, due to the high demand for employees, many medium and smaller businesses can’t afford to compete with a starting wage at 11.00 an hour.

Teenagers in high school looking for their first job for some spending money, seem to gravitate to their local pizza, hamburger, subs and ice cream shops for employment. Often their parents do not want their children to work a lot of hours for fear of interrupting their studies. As well, some teens just need the job to put on their resume for when they apply to colleges. Most of these teens are 16 and 17 years old who come to their prospective employers applying for a job with no work experience and a work ethic.

College students are a little more serious when looking for a job. On the average, they are looking for 20 to 25 hours a week. Their resume will include the little work experience that they picked up from their high school years. As well, there are teenagers who graduated or may not have graduated from high school looking for more hours to work, yet with very little work experience.

There are adults who have no college education who are looking for full time work to support themselves or their family. Sometimes the adults will have work experience or experience in the industry that they are applying, but sometimes not.

Less than a few months from now, some states and municipalities will be introducing $11.00 an hour to over $15.00 an hour minimum wage. Why should a 16 or 17-year-old with no or very little work experience be paid the same $11.00 to $15.00 an hour wage as an employee with some history of good work experience and work ethic? What message are we sending to our youth and young adults when no work experience and work ethic is required to get a wage similar to a living wage? If no work experience is required to start at a $15.00 an hour, what message are we sending teenagers and adults for building a meaningful work ethic? How can medium to small businesses afford to give pay raises to the employees who are working hard and deserve pay raises based on merit?

Is it time to start talking about a tiered minimum wage up to a living wage system that is based on work history? A system that allows teenagers who have very little to no work experience earn a wage more commensurate to their work history and abilities? A reasonable wage for new wage earners will allow employers to allocate money for properly training teenagers who are new to the workforce. I’m not talking about a couple dollars an hour minimum wage. Rather an entry level wage tier, like around 8.00 an hour. A second minimum wage tier that would allow students in college to earn a slightly higher minimum wage based on their work history. The second level tier can also be used for teen adults not going to college, looking for part or full-time work. A tiered minimum wage system would allow employers the ability to afford merit-based pay raises for part time college students and part and full-time teenagers not going to college. A third minimum wage tier for part and full-time shift leaders can be used to promote those employees within the organization or from outside the organization with work experience looking for advancement. A fourth minimum wage tier can be applied for non-management positions with work experience and the entry level wage for part-and full-time management level. The fourth level would be the starting point for a living wage.

As the wage for our current single minimum wage system trend upwards closer to a living wage level, a single wage system that is used for both minimum wage and a living wage encourages employee entitlement and offer no incentive for building a good work ethic. If our you are entitled to a minimum $11.00 to $15.00 wage, how can our youth entering the work force feel the pride that comes from incentive merit pay? Would a tiered minimum wage system that is tiered to a minimum living wage make more sense?